Hydro boss MacDonald blows smoke

Mr. Dean MacDonald gave a speech to the St. John's Rotary on Thursday, March 29. While it didn't receive the same buzz as the Wescott presentation at NOIA, it was more significant in a numbers of ways.

Over the years I've gone to lots of speeches by chairs of one crown corporation or another and they are generally sedate affairs.

It's worth reminding that these positions are not filled by people who have moved up through the ranks - they are not veterans of the industry. Therefore the chairs of the NL Housing Corporation and the NL Liquor Corporation are not distillers or home builders.

In fact these positions are political appointments who are given the task of ensuring that their organisation fulfills the policy role set out for them by government.

With that in mind, it's worth examining the basic themes of Mr. MacDonald's speech as covered by the local media.

The speech was mainly a spirited defence of the undersea electrical transmission route for Lower Churchill power and a general dismissal of the nay-sayers who question that proposal.

Sometimes called the Anglo-Saxon or Maritime route, this plan would see Lower Churchill power wheeled away from the Quebec border towards the coast of Labrador where it would be transmitted undersea to the island of Newfoundland. From there it would be transmitted down the west coast through another undersea line to New Brunswick.

Mr. MacDonald justifies this position by arguing that although it would add another billion of so to the cost of the project as a whole, that's money well spent because:

"The cost is such a damn good cost to not have to depend on anybody. To maybe pay a little more to build it, but when you sell it, we don't have to pay a toll charge on the way."

The costs to build the infrastructure for this route was estimated in 1968 as roughly $1billion. Accounting for improved technology and increased construction costs, the current price tag has increased to at least $2billion.

This was rejected in the 60's because it made the cost of power uneconomical to the customers.

MacDonald went on to note that there are many locations in the world with subsea transmission of power over longer distances.

At this point it's worth taking a look at a presentation called Subsea Power Transfer - What is the challenge delivered by Svend Rocke of ABB offshore Systems at the Applied Technology Workshop - Technology for for the Next Generation Subsea Systems in Oslo, Norway on February 11th, 2003.

When it comes to the technology and engineering of undersea power transmission systems, ABB offshore Systems are as good as it gets.

In a nutshell, his presentation makes it pretty clear that undersea power transmission is do-able but is the preferred option only when there is no alternative land route available. The reasons for using subsea transmission as a last resort are

• complexity of the components;
• increased costs of construction; and
  
• difficulty in effecting repairs
  

In general it's hard to escape the idea that it's not really a good idea to run high voltage power lines near or under salt water unless you really have to.

Are there locations in the world with subsea transmission of power over longer distances than we are talking about for this province? Yes there are.

But in no case are we talking about this much power being transmitted when there was an alternate land route available.

So if undersea transmission is the last resort, why does Mr. MacDonald give it so much profile? The answer, I think, can be found in an interview given by Mr. Cy Abery, former President to NL Hydro in the Independent in May 2006. In that story, it said:

"We always put that out there to make it sound like we had options," Abery says. "But everybody in the business knows that'’s foolishness. It sounds good in the newspaper. Joe Smallwood started that back in the 1960s calling it the Anglo-Saxon route. It was crazy then and it's crazy now."

Abery says any talk of a Maritimes route doesn't fool Hydro Quebec.

"They just smile," he says. "I mean you're in the middle of Labrador. The only border we've got is with Quebec. So you've either got to sell it to Quebec, or go through Quebec. And there's no reason you wouldn't sell it to Quebec. Their money is just as good as anybody else's money as long as you got enough of it."

Abery says Newfoundland could sell the power to another customer, in Ontario say, and simply pay Hydro Quebec to wheel it across its transmission lines. The fee for doing it wouldn't be unreasonable, he notes.

So the story of subsea transmission of power to avoid Quebec seems to be a smoke and mirror ploy before coming to an eventual commercial/political accommodation with Quebec and Hydro Quebec.

That kind of political goal fits in neatly with the rest of his speech which was purely political and had large parts having nothing to do at all with NL Hydro or electrical issues.

It's not often you see the Chair of a crown-owned electrical utility spray as much testosterone in a room as he did tossing out lines like "I'm mad as a Newfoundlander and Labradorian about what's gone on here. There may be a price to pay in the short term, but we have to draw a line in the sand" and "I'm ready for this war."

I can't help but wonder how exciting those Hydro Board meetings really are.

If the subsea transmission path ever does get built, it will be hard to view it as a technological marvel. In reality, it will be an expensive triumph of political spite over the ability to reach a commercial and political accommodation with our neighboring province.

That should be a bitter pill to swallow for an administration of self-styled world class negotiators.